Blockchain technology has different use cases for varying industries, and a major one is records management. A key concept of this technology involves storing data and records in a secure and decentralized environment.
In the traditional records management system, data and transactions are recorded by an intermediary and stored by a centralized body, thereby opening it up to easier manipulation. A centralized organization determines the transactions that should be recorded and stores them in a database that is centered in one spot. If an intruder is able to gain control of the centralized organization, they can manipulate the records that have been stored.
Blockchain technology focuses on decentralization, meaning that a network of nodes verify transactions, and store them in blocks. Usually, every node or most nodes have a distributed ledger that contains the list of transactions that have occurred in a network. If one node is destroyed, the network is not affected negatively. This technology has the potential of altering the way records management processes functioned in the past. It goes a long way in reducing the cost that accompanies managing and storing records while adding a higher level of efficiency into the mix.
Data breaches are serious issues in the traditional world. Small and big firms have suffered data breaches of different sizes, with many losing millions of dollars in the process. There have been cases of hackers introducing ransomware into a company’s database, with the threat of leaking sensitive information if they were not paid. Issues like this could lead to loss of reputation, money, and even the closure of the company. A popular case happened in 2019 when Facebook suffered data breaches.
According to a news article by NPR,
“Phone numbers, full names, locations, some email addresses, and other details from user profiles were posted to an amateur hacking forum on Saturday, Business Insider reported last week. The leaked data includes personal information from 533 million Facebook users in 106 countries. In response to the reporting, Facebook said in a blog post on Tuesday that “malicious actors” had scraped the data by exploiting a vulnerability in a now-defunct feature on the platform that allowed users to find each other by phone number.”
Usually, breaches end with the attackers illegally obtaining the personal information of employees, clients, business deals, financial data, and much more. The data may be sold on the black web to the highest bidders or displayed on a public website for everyone to see.
Another case that shook the world was the popular Sony hack. It affected the company and employees negatively. According to Wikipedia,
“On November 24, 2014, a hacker group identifying itself as Guardians of Peace leaked a release of confidential data from the film studio Sony Pictures. The data included personal information about Sony Pictures employees and their families, emails between employees, information about executive salaries at the company, copies of then-unreleased Sony films, plans for future Sony films, scripts for certain films, and other information. The perpetrators then employed a variant of the Shamoon wiper malware to erase Sony’s computer infrastructure.”
Issues like the aforementioned are why there is a raising need for blockchain technology to be incorporated in records management systems. Centralized record or storage systems tend to have a single point of failure risk.
Problems associated with centralized record-keeping systems
Partiality among third party providers
When an intermediary determines if records should be verified and stored, it could lead to partiality on their parts. They can decide to store some records and ignore others if they feel like doing that. On the other hand, nodes in a blockchain can’t decide if a record should be stored or not, as long as the necessary transaction fees are paid.
Slow reconciliation process
Using the traditional means of reconciling data and records from different and individual ledgers is not an easy feat. It is expensive, slow, redundant, and could lead to errors.
Integrity of records
Some traditional records management systems may not come with a historical ledger of changes, and when they do, it may be possible to delete the ledger. This means an insider or intruder can alter the records, and it may be difficult to pinpoint the source of the attack. The integrity of records is the main principle for a reputable records-keeping system, which blockchain technology can fix. It is easy to check the transactional records, as well as attempts made to alter them. Its immutability feature has made it an appealing feature to those that want corrupt-free data.
Where are blockchain records stored?
An important element of blockchain technology is decentralization, meaning that there is no centralized spot where records or data are stored. It is a network of nodes or computers that are scattered all over the globe, and they have a copy of the distributed ledger. Usually, the particular nodes that will verify a transaction and build a block may not know ahead of time that they will be the ones to be chosen to prevent any form of manipulation.
Once a new transaction occurs, it is announced to the entire network in real-time, thereby alerting the nodes that a brand new transaction has been verified and added to a block. Immediately the transaction has been validated by miners or validators (depending on the type of consensus mechanism that the network has), it becomes immutable and can’t be altered or reversed.
To answer the above question, records are not stored in a spot unlike in a centralized or traditional records management system.
Why is distributed record-keeping important in blockchain?
As earlier mentioned, a key tenet of blockchain is decentralization, meaning that verification is done by different nodes, and records are not stored in a centralized spot. Distributed record keeping is important in blockchain because it incorporates trust into an untrusted environment. People tend to have doubts concerning records stored in a centralized spot because there is the possibility that it could have been altered for different reasons. Storing records in different spots as seen in a blockchain makes it immutable, and almost impossible to manipulate past records. Users can read the records in the blockchain because of its transparency, and notice any attempt made by unscrupulous elements to manipulate a transaction. Transparency and immutability come from the distributed nature of this technology.
Using a decentralized records keeping system adds an additional layer of security to blockchain because it is almost impossible and a waste of computing power to try and manipulate the records stored by every node in a network. The computing power that will be needed to carry this activity defeats the gain of doing this.
How much data can a blockchain block carry?
The ledger size of the Bitcoin blockchain has expanded as the years go by, from 150 GB in 2017 to 250 GB in 2019. This means that it grew by 50 GB annually, and it is expected to be over 1 TB by 2030, especially with its growth rate. In the bitcoin blockchain, every node is not forced to have the complete ledger of the entire blockchain before they can work effectively.
Different participants have varying needs for getting involved in a blockchain. For some, they want to validate transactions, and they are called full nodes. Others may merely want to participate in the network.
According to 101 Blockchains,
“The full nodes are required for those who are willing to participate in the validation of the ongoing transaction. This means that they have to download the whole 250 GB of blockchain data containing the block headers and transactions.”
On September 19, 2020, the size of the full Bitcoin blockchain has gone past 300 gigabytes of data. Based on a news article by Decrypt, “This is the size of the full Bitcoin transaction history for the past 10 years. It’s also the amount of information full mining nodes need to download and keep on their hard drives after synchronizing with Bitcoin’s network.
In the first four years of its life, the Bitcoin blockchain just reached 20GB. It was only in 2016, when it reached 54GB, that its growth started accelerating—likely due to more people using the network. Now it grows at about 58GB a year.
While the size of Bitcoin’s blockchain doesn’t necessarily affect the network’s speed today—after all, full nodes need to download the whole thing only once during synchronization—some parts of it still can be optimized.”
In Conclusion
- Blockchain improves record-keeping by incorporating security, trust, decentralization, and immutability in the mix.
- Nodes verify the transactions in the network.
- Distributed record keeping is important in blockchain because it reduces the risk of manipulation.
- The size of the block increases as time elapses.
